Vol.2 No.1…GSR in wine???

Hi folks, hope you had a terrific new year’s eve and day. I felt I wanted to get started on the right track for 2016, so here goes:

The title is kind of a hook as it does not mean there is Gun Shot Residue in wine…although there could be in some of the cheap stuff. But there is arsenic in wine – some wine, most notably from the Central Valley where the San Joaquin Aquifer, the second largest in America, has been depleted, increasing levels of arsenic, but still not a health hazard…now if it was in water, it would be dangerous levels but unless you drink a couple of gallons a day of wine you should have no problems. But do keep in mind that arsenic is not water soluble and thus remains in your system and continues to build over time.

TB has become a big fan of organic (not necessarily certified organic but where vignerons try to keep it as close to that as possible), sustainable (the most common form of farming which reduces or removes the use of pesticides and fertilizers, relying on planting mustard, etc. between the rows), and biodynamic (think of the Farmer’s Almanac: planting at the right time, positioning rows for maximum light exposure, etc.).

In Vol.1 No. 30, TB recommended two books on the Chinese influence on  Bordeaux wines and it isn’t for the best. One was Thirsty Dragon: China’s Lust for Bordeaux and the Threat to the World’s Best Wines by Susanne Mustacich. Anyone who wants to do business in China is either very brave or naive. But it is the impact of this and the wealth in China that has corrupted the Bordelais. They have bought up dozens of small chateaux and then using them to bottle plonk using the chateaux name for credibility, or taking a name like Chateau Lafite and by simply  inserting a second ‘f’ (which is what the wine should be graded), selling wine of unknown origin and low quality to a people who have zero knowledge of wine. Worse, the government accommodates them by letting them copyright names…even well-known names of providers and then suing them and winning because under Chinese Law whoever copyrights it first wins…with a lot of palm-greasing I am sure.

This has changed the Bordeaux marketing process from having a negociant who buys the wine to sell to retailers, and a courtesan who is paid 2% of the cost to have the winery sell their wine to certain negociants. The Chinese have bypassed this process by going direct to the chateau and offering them incredible sums for their wine. This has made the negotiants pay the same price or higher and has minimalized buying of the wine by Europeans and Americans…it simply cannot go up in value like it used to, and the negotiants and retailers bear the risk.

The other book, Vino Business – The Cloudy World of French Wine by Isabelle Saporta  a french investigative reporter who, for her disclosures is surprisingly alive. Furthermore had she misstated facts she would have unquestionably been sued. Readers of this blog have heard the author refer to terroir, the combination of soils, climate, etc. that imparts a certain flavor in the wine. Very few changes have been made to the chateau rankings in the classification that goes back to 1855. But many changes have occurred since the Chinese invasion. Among them are requiring large parking lots for guests, a nice looking chateau, and many more variables but the most damning is that they are forcing out the small growers who in turn either have to sell to a classified chateau or to a Chinese. These are estates that have been in their families for hundreds of years. Worse, with the prices of the land skyrocketing if they don’t sell the estate taxes will destroy them financially.

Now let’s get to the quality issue. First, they have increased production which means that the wine should be cheaper not more expensive, ceteris paribus, as an economist would say. They are doing this in many ways: by over-fertilizing with chemical fertilizers and spraying vineyards with insecticides from helicopters! This has increased levels of cancer to locals and chemical analyses of all the classified growths shows levels of those chemicals in the wine, including some that are on the banned list!

Back to terroir, the boundaries of the appellations (Pauillac, St. Emilion, etc.), were established based on the very elements of terroir, and while no winery outside can list the appellation on the bottle…unless, the classified chateau buys an adjoining property outside the appellation and are then allowed to include the fruit in their wine! Where are the appellation controllee’s? Siding with the big chateau on virtually every element stated above, when their charter is to improve the quality of the wine for the benefit of all within the appellation. Recently, some irate small landowners in St. Emilion took it to court…and lost which is incredible.

Well, I got more into Bordeaux than I intended today but if it stops you from being stupid enough to buy the classified growths, it will well be worth it. In the meantime, there are many unclassified growths – with a house on the land instead of a chateau, and no parking lot. that are making excellent wines at a fraction of the price of the big boys.

So I am going to leave you hanging on what was meant by GSR…stay tuned…will be back in a couple of days with the full explanation and it may shatter some of your ideas of what the best wines really are.

Happy New Year, friends and readers!

Trader Bill

©Copyright 2016 TBOW, all rights reserved.

 

 

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How did Trader Bill originate? It was conceived by me as a way of providing information summaries of global financial markets so that friends and associates could bring themselves up to speed on events and changing market conditions upon their arrival at work. In addition, it provides information on speakers and economic releases that day with consensus estimates and level of last release so that the reader is prepared to react, or knows how the market might react upon the release of information. Who is Trader Bill? Initially any reference to me was as ‘i’. This is to remove the aura of ego and to suggest that i am but a humble reporter, albeit with 35 years of investment experience. Investments are demanding of ego, however, or one would not feel that he was qualified to manage someone else’s money in the first instance. Therefore i needed an ‘alter-ego’. Like Winchell and Mahoney, Edgar Bergen and Charlie McCarthy and especially Trader Vic and Mai Tai’s! Why Trader Vic? Because he was a likeable man who delivered pleasure to his customers and knew exactly what their desires were. The reason for the alter ego became obvious once I introduced Trader Bill into my commentaries: people started asking what Trader Bill thought. They had never asked me what I thought before, but suddenly they wanted to know what TB thought! Now mind you they KNEW that I was Trader Bill but for some reason he became bigger than life. Maybe it was the small ‘I’? What does Trader Bill try to do?His goal is to educate from his years of experience. Consider that most of the traders and people managing investments weren’t even around in 1987 for the crash! Consider that Graham and Dodd, and even Warren Buffet are not relevant to them, too old hat. Their historical perceptions of markets and fundamentals (earnings, price/earnings ratios, bonds, debt service coverage) are irrelevant in this fast moving world. This is the NEW ECONOMY, or is it? How did your style originate?Years ago i found that i had a knack and talent for writing. In addition, i developed an ability to analyze market news about 15 years ago. It took the Crash of ‘87. Prior to that i was just listening to what others said about the economy. But bond yields had been soaring in ‘87 yet the stock market just kept hitting new highs. That was when i began to learn about markets. i have both a dry and witty sense of humor (some call it inane!). Therefore i attempt to make even the worst news somewhat amusing: whether it is the absurdity of an economic release, or the comments of a CEO. This is trading desk humor (or gallows humor). It isn’t politically correct but it does ease tension. Ironically, it is seeing the light at the end of the tunnel (in the Navy they say: it’s always darkest before it’s pitch black!), that allows you to be more objective in your analysis, as bad as a situation is there will still be a tomorrow! You will see that i practice three-dot journalism, a style made famous by San Francisco reporter Herb Caen, whom i idolized. At least to me it is effective. What is so special about your analysis?Frankly, i don’t know that it is special, but at least it beats “the market closed down today on profit taking.” What i do know is that most of what you read is spat out without considering whether or not it is rational, like the above statement. Is it right? Sometimes yes and sometimes no, and that is the key to what is different about my analysis: it is meant to make you think. Is Dan Rather right or is Trader Bill right? If it causes you to stop and think about it, regardless of whether you agree, i win! Because THAT is my goal…not to have you think i am a guru, got that? Bet you never heard that ANYWHERE before in my business! Instead they want you to think just how smart they are but remember in this business if you are right 60% of the time you ARE a genius! Another thing that is different is when i am wrong on an analysis i will tell you, not hope you forget what i said. So now you have the tools to do what the speculators and hedge funds do: challenge authority, and if you make money it is because YOU did it not me. i was just a tool, your flunky to do the grunt work and let you decide…course you could be wrong too but at least you looked at the big picture. But the goal is also to have fun! This shouldn’t be a business of hushed tones and grim faces. It is a living, breathing thing and nowhere else in the world do you have the odds as much in your favor as here. Just beware of the guy who wants to put his arm around you and tell you he is your friend. So there you have it. I hope you select me as one of your sources for market information. If you do I promise to work my best for your financial success. Trader Bill

2 thoughts on “Vol.2 No.1…GSR in wine???”

  1. Chinese wine moguls, arsenic, greed, corruption; well I just poured all my Château Lafite-Rothschilde , Saint-Emillion, and Château Latour down the drain. From now on it’s just beer!

    Like

    1. sacre bleu! Plenty of good French wines. Just avoid classed Bordeaux.
      P.S. should have sold them to the Chinese. Hey, they’ll buy the bottles to fill with plonk!

      Like

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